Riga, September 11th, 2009

MEDIA INFORMATION

JSC “Latvian Shipping Company” asks to evaluate actions of IBI as a questionable legal entity

The public joint stock company “Latvijas kuģniecība” (Latvian Shipping Company - LASCO) is not taking seriously the announcements made by the questionable firm International Baltic Investments Ltd. (IBI) and asks also broader society, including participants of securities market, shareholders and investors to evaluate them critically. At the same time, LASCO draws attention of the responsible public authorities to nonconformity of public activities of IBI to its official financial documents. LASCO reminds that IBI is the same firm that has been claiming to be an LASCO shareholder for a long time, at the same time making to seriously question their legal title to these shares that have been arrested in the course of criminal proceedings for defrauding several tens of millions US dollars from LASCO – the current IBI officials are also very likely to be involved in this fraudulent scheme. Although IBI publicly claims to be holder of LASCO shares, the official annual report of IBI for 2008, which is drawn up in accordance with standards of the Republic of Latvia and with international accounting standards, clearly attests that IBI does not regard itself as holder of LASCO shares.

LASCO repeatedly draws attention to the fact that the company filed a claim statement to the Riga Regional Court already in spring of 2009, requesting to invalidate the transactions with LASCO shares between IBI and offshore companies ‘Ojay Limited” (Ojay) and “Eastgate Properties Limited” (Eastgate). Documents at disposal of LASCO clearly indicate that the transactions of LASCO shares that have as if taken place between the said companies are actually of manipulative character with a purpose to hide property, which has been acknowledged also by an official of the Economic Police Department of the Central Criminal Police Department of the State Police in 2008 within framework of criminal proceedings. Court has accepted this claim statement of LASCO for reviewing, and the first court hearing is to be held in December 2009.

 “Such a firm, which is involved in fictitious transaction and cannot even be regarded as LASCO shareholder, must be really shameless to afford to spread such absurd and groundless assertions about our company in the public space. For that reason we analyzed the annual report of IBI for 2008 and also ask law enforcement bodies, the Riga Stock Exchange, the Financial and Capital Market Commission and the Register of Enterprises to do the same. The report of IBI is yet another proof for the tendentious nature of transactions made with LASCO shares – the transaction with LASCO shares worth at least 55 million lats does not appear anywhere in any way in the cash flow, there is not a hint of that also in the balance sheet, and no indication to possession of such shares can be found anywhere else in the report,” emphasizes Management Board member and Vice-President in Financial Matters of LASCO Raivis Veckāgans. “We cannot understand why it is easily allowed in the Republic of Latvia for such IBI offices to operate, when their official annual report clearly demonstrates that such transaction is not registered anywhere and that taxes have not been paid for that. However, obviously they have all possibilities to publicly usurp a property worth tens of millions of lats without any trouble, or at least try to do that.”

Research of market and public opinion is the officially specified main activity type of IBI, which as if administers shares of the international shipping company LASCO with the face value of 55 million lats. According to the annual report of IBI for 2008, the company’s shareholders are Arnis Nīcgalis, Mārtiņš Kvēps and “Heidelberga”  Ltd. Income of IBI in 2008 constituted 0 lats, but expenses/losses – 31 lats. This firm has not paid a santim in taxes in 2008 – it has failed to pay the social, personal income, or corporate income tax. It results from the report that, possibly to evade taxation, members of both Management Board and Supervisory Council for IBI  have not received remuneration for work in 2008, while at the same time, IBI itself owes the Management Board more than 5,000 lats, although the funds of IBI constitute 20,000 lats according to the report. The only specified payment to the state budget is 7 lats, yet even this amount apparently has not been paid by IBI, as it is reflected in the creditor section of the balance sheet.

Contrary to the doubtful and, most credibly nonexistent, fraudulent transactions between the offshore companies and IBI, management of the public joint stock companies LASCO and “Ventspils nafta” (VN) have complied with all requirements of laws and other regulations, by duly informing participants and supervisors of securities market about their plans, and corporate income tax of almost 6 million lats was transferred by the seller party VN to the state budget in 2008 as a result of the concluded transaction.

LASCO will continue publicly providing all the information at its disposal about owners and officials of IBI, their questionable and unclear transactions, inter alia informing also the appropriate state law enforcement bodies, structures supervising securities market and registering enterprises.

The nature of the previously made fictitious transactions is demonstrated by the fact that shares of Ojay and Eastgate were transferred to IBI account already on February 1, 2008, although the transaction was legally concluded only on February 4, which is confirmed to LASCO in a letter by IBI itself. According to standards of the Civil Law, a contract can be regarded as completely concluded only when a complete agreement on relevant components of the transaction has been reached between the contracting parties. Also according to Law on the Financial Instruments Market, dishonest dealings and market manipulations with financial instruments are forbidden.

Moreover, on February 7, 2008, LASCO received an announcement from IBI dated with the previous day about gaining substantial direct interest of 27.55% or 55,099,352 bearer shares in LASCO, indicating February 4 of the same year as the date of obtaining these shares. On February 11, 2008, LASCO received announcements also from Ojay and Eastgate that on the same date, February 4, also these companies have gained substantial interest in LASCO in the same amount of shares as previously indicated by IBI. “Heidelberga audits” Ltd was specified as return address for the two announcements of offshore companies, whereas the announcement on behalf of IBI was signed by A.Nīcgalis – one of the owners of “Heidelberga audits” Ltd. No corrections or specifications to these conflicting announcements excluding one another have been received by LASCO until this very moment.

For more detailed information:
Marita Ozoliņa-Tumanovska
Manager of PR & Advertising Department
Telephone +371-67020120, 29287169
marita.ozolina@lscgroup.lv